Regulation of spectrum licensing

1. Current spectrum allocations represent a barrier to entry to the mobile market. So concluded the Commerce Commission in its Mobile Market Review.¹⁷ As it will be five years before the existing management rights expire, the MED must determine whether to (i) withdraw the management rights of the existing spectrum holders and re-allocate the spectrum now, or (ii) provide for the temporary licensing of spectrum pending re-allocation at management right expiry. Failure to take action promptly will only serve to delay, deny, or degrade any efforts at competitive entry to the mobile market.
2. In the event the MED chooses not to re-allocate the management rights this year, MED should coordinate with the Commission in classifying a mandatory spectrum licensing service under the Telecommunications Act 2001 in order to allow new entrants to make use of the spectrum earlier. As a designated service, the Commission could regulate both the terms and pricing of the regulated service.¹⁸ It is our recommendation that such a service be conditioned on the Access seeker holding additional cellular spectrum. In addition, a minimum build commitment would not be an unreasonable requirement. The pricing principle should be based on TSLRIC, and in no event should licensing be more than the cost paid for the spectrum, pro-rated for the remaining life of the spectrum management rights.

¹⁷A Review of Cellular Mobile Market Entry Issue, 10 October 2006, Commerce Commission.

¹⁸Mandatory roaming would also help to mitigate the effects of the current lock on these licenses, but does not result in the same investment in infrastructure and therefore is best used as a temporary substitute during a network build rather than a replacement for equitable spectrum allocation.